Nikken Microsystems$($B$).$ Assume Nikken Microsystems has sold Internet servers to Telecom$$ Espa$$a for

euro $716$ comma $000716,000.$

Payment is due in

fourfour

months and will be made with a trade acceptance from Telecom$$ Espa$$a Acceptance. The acceptance fee is

$1\mathrm{.}5\%1\mathrm{.}5\%$

per annum of the face amount of the note. This acceptance will be sold at a

$4\mathrm{.}1\%4\mathrm{.}1\%$

per annum discount. Also assume that Nikken Microsystems prefers to receive U$.$S$.$ dollars rather than euros for the trade transaction. It is considering two$$ alternatives: $1)$ sell the acceptance for euros at once and convert the euros immediately to U$.$S$.$ dollars at the spot rate of exchange of

$ $1\mathrm{.}03$ divided by euro$$1\mathrm{.}03/$

or$2)$ hold the euro acceptance until maturity but at the start sell the expected euro proceeds forward for dollars at the

$44-$month

forward rate of

$ $1\mathrm{.}05$ divided by euro$$1\mathrm{.}05/.$